Market Minnows: Gusbourne is the UK's third largest wine producer

A lack of action on climate change might have stolen Greta Thunberg’s childhood but for the UK wine industry it is a blessing in disguise.

Southern England now has a climate similar to northern France, wet and moist during the spring and hot in the summer.

Vineyards have sprung up across the South-East over the past 20 years and figures for 2018 show there are 800 in England with an average of 3,579 hectares under vine.

Gert Zonneveld, analyst at Canaccord, said: “Climate change has edged up average annual temperatures and reduced frost days, making it an increasingly attractive area for growing vines.”

For many, building a vineyard is unrealistic. But the ordinary investor can enjoy the “sparkling wine boom” other than just by drinking it.

One company that has caused a stir in the City is Kent-based Gusbourne which floated on AIM in September 2013. It is Britain’s third largest wine producer by acreage under vine and has 231 acres with 57 to be planted next year. Most of Gusbourne’s wines are sold in the UK, mainly at high-end restaurants and hotels. Only 12% of volumes last year were exported, although Canaccord expects that percentage to grow.

Revenues are not big and it only turned over £1.3 million last year. However, this is expected to grow sharply as Gusbourne’s continues to plant vines at a rapid pace.

Canaccord says Gusbourne will become earnings positive in 2022 and operating cash flow positive the following year. Its current share price is 67p but Canaccord has a target price of 115p and some wealthy backers including Lord Ashcroft, who has 72%.

So bottoms up.